The Motley Fool

The next ASX industry at risk of a Google disruption

Some of Australia’s industry-leading ASX stocks are facing the threat of a digital disruption from US tech giant Alphabet Inc (the parent company of Google).

I am not talking about media companies which have already suffered a painful de-rating. I am referring to travel-related ASX stocks such as the Flight Centre Travel Group Ltd (ASX: FLT) share price, Webjet Limited (ASX: WEB) share price and even the Qantas Airways Limited (ASX: QAN) share price.

These stocks have underperformed the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index over the past 12 months but could be facing more pressure over the medium- to longer-term as Google is positioning to eat their lunch.

Google wants to own travel

There are signs that the world’s largest search engine is trying to dominate the travel space, according to a report in the Australian Financial Review. Anything Google wants, it usually gets thanks to its over-sized check book.

Travellers use the search engine to research holiday destinations and there are accusations that Google is directing traffic away from popular websites to sites that it owns. The Silicon Valley-based giant has revamped its Google Travel business back in May to make it easier for users to research and purchase plane tickets, hotel accommodations and other travel related services.

Google observers point out that it paid US$700 million in 2010 for ITA Software (search engine for airfares) and it plans to enter any industry where it believes intermediaries do not add value.

With the growing popularity of online travel bookings, Google poses an existential threat to the likes of Flight Centre and Webjet (and many other travel industry leaders for that matter), who are essentially funding their own demise as many of these companies advertise with Google.

Airlines could also face Google turbulence

It’s believed that, if left unchecked, Google will have so much market power that it can start dictating terms to the airlines, and that’s how Qantas and Virgin Australia Holdings Ltd (ASX: VAH) can get into trouble.

However, there may not be an inevitability to Google colonising the travel sector. There are calls for Google to be broken up to ensure it doesn’t snuff out competition, and anti-trust regulators around the world (including our ACCC) are likely to be watching very closely. Competition regulators are more alive to the rise of tech giants these days than in the past as they’ve seen the impact that Google and Facebook, Inc. have had on their competitors.

Forecasting regulatory action is difficult and that makes it challenging for investors looking to invest in the sector. But drastic change won’t come quickly (Rome was built in a day and it wasn’t destroyed in a day either). Nonetheless, I believe applying some sort of “Google discount” on these stocks is probably warranted.

If you are looking for growth, you could be better off reading this free report from the experts at the Motley Fool.

Follow the link below to find out more.

One ASX Stock For An Estimated $US22 Billion Marijuana Market

A little-known ASX company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.

And make no mistake – it is coming. To the tune of an estimated $US22 billion.

Cannabis legalisation is sweeping over North America, and full legalisation arrived in Canada in October 2018.

Here's the best part: we think there's one ASX stock that's uniquely positioned to profit immensely from this explosive new industry... taking savvy investors along for what could be one heck of a ride.

AND, this is the first time The Motley Fool Australia has EVER put a BUY recommendation on a marijuana stock.

Simply click below to learn more on how you can profit from the coming cannabis boom.

Click here to find out more

 

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. Connect with him on Twitter @brenlau.

The Motley Fool Australia owns shares of and has recommended Flight Centre Travel Group Limited. The Motley Fool Australia has recommended Webjet Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

NEW. Five Cheap and Good Stocks to Buy in 2019…

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.8% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!